Brookfield Corp. Envisions Synergy Between Private Credit and Banks
Private credit firms and banks are poised to coexist in the $1.5 trillion market, even as direct lenders have stepped in to bridge the gap created by their traditional counterparts amidst a high-interest-rate environment. Speaking at the Mizuho Finance Leaders Forum in New York, Chief Financial Officer Nicholas Goodman of Brookfield Corp. expressed optimism about the continued relevance of private credit. He sees an opportunity for collaboration rather than competition between private credit and banking institutions.
This viewpoint aligns with recent comments made by John Zito, Deputy Chief Investment Officer at Apollo Global Management Inc., who also envisions a harmonious partnership between private credit firms and banks. Brookfield Asset Management Ltd., a spin-off from Brookfield Corp. in December, recently unveiled plans to raise up to €10 billion ($10.7 billion) in collaboration with French bank Societe Generale SA to establish a "high-quality" private debt fund.
However, the competition still remains robust. Alternative asset managers have been venturing into private lending, seizing opportunities as banks pulled back due to interest rate hikes by the Federal Reserve and increased risk aversion among investors. Several major financial institutions have been intensifying their involvement in the private credit sector, signaling the sector's attractiveness.
Brookfield Corp. is aggressively expanding its presence in the private credit arena, with ambitious goals. They anticipate their credit assets under management to surge from $170 billion to $500 billion over the next decade, according to a recent presentation. Additionally, the firm's insurance assets are poised to more than double, reaching $100 billion in the coming months, following the completion of the acquisition of American Equity Life Holding Co.
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